Spire developer hit with lawsuits over industrial buildings

Garrett Kelleher, whose overzealous proposal to build the Chicago Spire ended in a foreclosure filing, faces more lender trouble over a pair of industrial buildings near Bucktown that date back to the Irish developer's early career as a painting contractor in Chicago.

Bridgeview Bank Group has sued Mr. Kelleher to collect nearly $1.7 million on a loan secured by two buildings at 1915-23 N. Elston Ave., according to a lawsuit filed Sept. 13 in U.S. District Court in Chicago.

Mr. Kelleher, 52, began his Chicago career in the 1980s as a commercial painter, working out of one of the Elston buildings, records show.

“He worked for a lot of residential developers,” said John Figlioli, president of Chicago-based Garrett Realty & Development Inc., which used to handle leasing at the Elston buildings. “He had a thriving painting business at one time and I think that's how he got the itch, watching . . . what some of the other residential developers were doing.”

Rather than foreclosing on the properties, Bridgeview is seeking to enforce loan guarantees signed in 2007, when an entity controlled by Mr. Kelleher borrowed $1.6 million from the Bridgeview-based bank.

Named in a nearly identical suit filed Sept. 13 in Cook County Circuit Court is Peter Smolenski, a former managing director in Chicago with Mr. Kelleher's Dublin-based real estate firm Shelbourne Development Ltd. Mr. Smolenski now has his Chicago-based own real estate investment firm, Logan Ventures Fund.

Bridgeview also holds a junior mortgage on a nearby building at 1525 W. Homer St. that was hit with a foreclosure suit filed by Akron, Ohio-based FirstMerit Bank N.A. last November. Bridgeview has filed its own foreclosure claim in that case, seeking $1.5 million, court records show. The case is still pending.

Messrs. Kelleher and Smolenski did not return messages. Their lawyer, Robert R. Tepper of Chicago, declined to comment. A Bridgeview representative did not return calls.

Chicago-based real estate brokerage CTK Chicago Partners is marketing the Homer building for sale with an asking price of $2.2 million, according to a flier. The Elston buildings, which had an asking price of $1.7 million — roughly the same amount as the debt — are under contract, according to real estate data provider CoStar Group Inc. A CTK executive did not return messages.

The proposed site of the Spire along the north bank of the Chicago River has been tied up in a foreclosure case since 2010. Chicago-based developer Related Midwest has acquired at a discount about $93 million in bank debt on the 2.2-acre development site. The foreclosure case is still pending.

In the late 1990s, Mr. Kelleher was one of several developers who envisioned the area near Armitage and Elston avenues as hub for tech firms, with outdated industrial buildings converted into trendy loft offices, Mr. Figlioli said.

“If things had continued, he might have been right,” he said. “But the dot-com boom imploded and those things never happened.”